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FDA Stops 23andMe from Marketing DTC Personal Genome Service

On November 22, 2013, the Food and Drug Administration (FDA) sent a warning letter to 23andMe regarding its direct-to-consumer (DTC) Saliva Collection Kit and Personal Genome Service (PGS). The agency directed the company to “immediately discontinue marketing the PGS unit such time as it receives FDA marketing authorization for the device.” The FDA is concerned that 23andMe is marketing a test that is being used to diagnose patients, which has not been “analytically or clinically validated” for “its intended uses.” The agency was particularly upset with the company’s “new marketing campaigns, including television commercials,” which further expanded the number of indications PGS –without having first obtained FDA authorization.

Outpatient Bundling of Lab Tests Begins on January 1, 2014

On November 27, 2013, the Centers for Medicare and Medicaid Services issued its final 2014 hospital prospective payment rule, which outlines Medicare’s hospital payment policy for next year. Included in the new rule is payment change affecting outpatient testing. Starting on January 1, 2014, the agency is planning to ‘bundle’ hospital outpatient laboratory tests within ambulatory patient classification (APC) groups if the test is ordered on the same date as the primary service and by the same provider. According to CMS, this change “modestly reduces payment to rural and major teaching hospitals, as they will no longer receive separate payment for common laboratory tests.” Laboratory tests not included in an APC will be continued to be paid based on the clinical laboratory fee schedule rate.

CMS Reduces Lab Fees for 2014

The Centers for Medicare and Medicaid Services (CMS) recently published its annual transmittal notice, which lists the 2014 consumer price index (CPI) update for clinical laboratory fees. Since the passage of the Affordable Care Act (ACA) of 2010, the CPI update has been subject to a number of reductions. Each year an annual productivity adjustment is subtracted from the inflationary update. Once that calculation is completed, the fee is reduced by another 1.75 percent. For 2014, laboratory fees will be reduced by .75 percent. This does not include any future reductions that could result from sequestration or congressional budget cuts. GAU will continue to report on future payment decisions.

CMS Looking to Cut Lab Fees…Again

CMS also released a final physician payment rule on November 27th that also affects clinical laboratories. The agency plans to use its annual rulemaking process for setting new code payment rates to review all existing laboratory codes over a five year period. CMS will examine each test to determine if technological advances have resulted in a reduction in laboratory costs for performing the test. The agency hopes to capture some of the cost savings through reduced reimbursement. CMS will look at a number of factors to determine which tests should be evaluated first, including test volume, payments and rate of growth. The first list of tests should be published during the summer of 2014 with a public comment period.